The digital advertising market looks set to escape the worst excesses of the Covid-19 economic downturn, although it will still record its first decline in annual spend since the online revolution first erupted over 20 years ago, a new forecast claims.
In its April 2020 study, the IMF predicted that the coronavirus and the global lockdown will spark the worst economic recession since the Great Depression of the 1930s.
However, according to IAB Europe’s chief economist Dr Daniel Knapp, who modelled his forecasts on macroeconomic indicators, digital is looking to be the least affected advertising medium. While traditional media spend could plummet by nearly a quarter (-21.3%), digital will fall by just 5.5% this year across Europe.
The latest AA/Warc Expenditure Report forecast Q2 spend to crash 39.1%. Every medium – even digital channels – is facing double-digit declines in April, May and June, with Internet search (-29.6%) and online display (-31.8%) oth suffering.
It is all a far cry from last year, according to IAB Europe’s AdEx Benchmark study, which shows digital advertising grew 12.3% in 2019 to €64.8bn (£57.8bn), driven by strong growth in out-stream video, mobile and social spend. On average, €4bn (£3.6bn) has been added to the digital advertising market every year since 2006.~
The research, now in its 14th year, also shows that in 2019, a total of 21 markets experienced double-digit year-on-year growth, led by the Eastern and Central European countries of Serbia (+28.4%), Ukraine (+28.0%), Belarus (+25.2%), Croatia (+22.3%) and Turkey (+19.1%).
However, the UK continues to dominate the sector by market size, at €21.4bn (£19.1bn) worth over twice as much as second placed Germany on €9.4bn (£8.4bn), followed by France €6.1bn (£5.4bn), Russia €4.9bn (£4.4bn) and Italy and Spain on €3.2bn (£2.9bn).
In terms of disciplines, video grew by nearly 30% to almost €10bn (£8.9bn); with out-stream was seeing an increase of 36%. In some markets, out-stream experienced growth of more than 40%, for example Finland, Greece and the UK.
Social fuelled display growth across Europe, up 25.6% year-on-year with double-digit growth in all 28 markets. Search remains the largest online advertising category in terms of revenue with a growth of 11.8% and a market value of €28bn (£25bn). Total mobile ad spend grew by 24.9% in 2019 to exceed €30bn (£26bn) and account for nearly half (47%) of all digital ad spend in Europe.
Dr Knapp said: “The three forces mobile, video and social continue to drive growth across the region. As in particular programmatic and in-stream video mature, growth in the display segment outside social accelerated for the second year in a row, demonstrating the diverse opportunities in the digital advertising sector.”
IAB Europe chief executive Townsend Feehan added: “Whilst we are pleased to see another strong year of growth in 2019, we are well aware that 2020 will not follow the same trend due to the pandemic affecting all industries, businesses and lives. As an industry association with the aim of supporting digital business, we are working hard to provide insights into the impact of Covid-19 on investment levels, and support our members through these challenging times.”
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